Suresh lent out a sum of money to Rakesh for 5 years at simple interest. At the end of 5 years, Rakesh paid 9/8 of the sum to Suresh to clear out the amount. Find the rate of simple interest per annum.

Let the sum of money lent out by Suresh to Rakesh = P

Amount paid by Rakesh to Suresh after 5 years = $$\frac{9}{8}$$P

Let the rate of simple interest = R%

$$\Rightarrow$$  P + $$\frac{\text{P}\times5\times \text{R}}{100}$$ = $$\frac{9}{8}$$P

$$\Rightarrow$$  1 + $$\frac{R}{20}$$ = $$\frac{9}{8}$$

$$\Rightarrow$$  $$\frac{R}{20}$$ = $$\frac{9}{8}-1$$

$$\Rightarrow$$  $$\frac{R}{20}$$ = $$\frac{1}{8}$$

$$\Rightarrow$$  R = 2.5%

$$\therefore\ $$Rate of simple interest per annum = 2.5%

Hence, the correct answer is Option B